Reference no: EM13695898
Monetary Policy Debates:
a) Monetary Transmission Mechanism: According to the Keynesian school, show what happens, step by step, when the Federal Reserve sells US treasury bills to US banks.
i) Show the impact in the Money Market
ii) Show the impact in the Keynesian Cross Diagram
iii) Show the impact in the IS-LM graph
iv) Show the impact in the AD/AS graph
b) Quantity Theory of Money: According to the Monetarists and Rational Expectations, explain what happens, step by step, when the Federal Reserve sells US treasury bills to US banks. Describe the impact in words and:
i) Show the impact in the AD/AS graph
ii) Show the impact in the Phillips curve. (Include Short-run and Long-run)
c) What is the difference between the Keynesian view and Monetarist/Rational Expectations view on the short run and long run effects of discretionary monetary policy? What does this imply about the slope of the AS curve between these two schools of thought?
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Features of a desirable monetary policy instrument
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Marketing strategies and organizational designs
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Debts and deficits
: Debts and Deficits: Compare the traditional view versus the view of Ricardian equivalence of the effects of a debt-financed tax cut on:
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Rule based monetary policy
: Rule Based Monetary Policy: Below draw an AD/AS graph and a money market graph side-by-side. For the money market, use an upward sloping money supply curve and assume that the equilibrium interest rate in the money market is 5%.
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Monetary policy debates
: Monetary Transmission Mechanism: According to the Keynesian school, show what happens, step by step, when the Federal Reserve sells US treasury bills to US banks. Quantity Theory of Money: According to the Monetarists and Rational Expectations, expla..
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Traffic light is set to switch from red to green
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Explain the meaning of monetary neutrality
: Explain the meaning of monetary neutrality and illustrate graphically that there is monetary neutrality in the long run in the aggregate demand–aggregate supply model.
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Profit-maximizing price and quantity chosen by monopolist
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Aggregate-demand curve slopes downward
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